GAO Sustains Protest for Awardee’s Organizational Conflicts of Interest

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In its recent decision in the Matter of: Steel Point Solutions, LLC, the GAO considered the concept of Organizational Conflicts of Interest (OCI).  OCIs usually fall into one of three categories: “biased ground rules,” “impaired objectivity,” and “unequal access to information.”  In this case, the GAO sustained a protest because the Agency failed to adequately consider the extent of potential impaired objectivity OCIs on the part of the awardee.  Impaired objectivity OCIs often arise where a contractor’s work under one government contract may interfere with the contractor’s ability to render impartial advice on another contract.  The RFP contemplated the award by the National Geospatial-Intelligence Agency (NGA) of an indefinite-delivery, indefinite-quantity (IDIQ) contract to provide services wherein the contractor would be required to analyze the agency’s business processes and recommend solutions for improving or streamlining those processes in the development of a corporate automation implementation center (CAIC).

The Protester, Steel Point LLC, raised three OCI-based grounds of protest alleging that Deloitte, the awardee, had three independent OCIs based on other contracts it was performing for the agency.  While the GAO found no merit on one of the allegations, it expressed concern regarding the other two and sustained the protest.  In sum, two of Deloitte’s existing contracts created the possibility that it would be responsible for reviewing its own work on the CAIC contract.  The opinion discussed two forms of impaired objectivity: 1) “where a firm may be called upon to evaluate the work it has performed under another contract”; and 2) “where a firm is called upon to perform analysis and make recommendations regarding products manufactured by it or by a competitor.”

The first of the problematic contracts was a task order under the broader EMERALD contracting program in which Deloitte, as a subcontractor, provided consulting services on the agency’s IT investment and divestment decisions, and its budget prioritization decisions.  Using the second impaired objectivity standard from above, the GAO determined that under the EMERALD task order Deloitte could have been responsible for recommending the purchase of IT products which it would then sell to the agency under the CAIC contract.  Furthermore, despite the contracting officer’s conclusion that Deloitte’s OCIs were mitigated since the prime contractor under the EMERALD contract was required to implement an OCI firewall, the record contained no indication such a firewall was created.  The GAO found these concerns sufficient to sustain the protest.

The second challenged contract being performed by Deloitte was a Cybersecurity Risk Management and Assessment (CRMA) contract, wherein Deloitte was responsible for facilitating the review and approval of all agency information systems.  Deloitte’s proposal failed to adequately address a mitigation strategy for this risk.  In fact, Deloitte’s mitigation plan from the CRMA contract had already included avoidance of contracting opportunities that could create an OCI, which the GAO found to be inconsistent with Deloitte’s submission of a proposal for the CAIC contract.  Furthermore, the GAO noted that the agency initially failed to perform an OCI analysis, despite later concluding, after the Protester raised the issue, that Deloitte could simply recuse itself from performing the CRMA contract when such performance would create a conflict with its CAIC performance.  The GAO found that Deloitte’s submission of a proposal undermined the notion that it would voluntarily recuse itself from performance should a conflict arise.  Thus, the GAO sustained the protest on this ground in addition to the concerns arising from the EMERALD task order.

OCIs pose a concern to every government contractor.  If the potential for such conflicts arises during proposal development, businesses must determine whether the conflict is nevertheless mitigable, and if so, identify a mitigation strategy.  

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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